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LIVESTREAMING Ministerof Financepresents 2025 Mid- Year Budget Reviewin Parliament

Ghana's Minister of Finance Presents 2025 Mid-Year Budget Review in Parliament

In a pivotal session of Ghana's Parliament, the Minister of Finance delivered a comprehensive mid-year budget review, outlining the government's fiscal performance for the first half of 2024 and projecting strategies extending into 2025. This presentation, streamed live to the public, served as a critical update on the nation's economic trajectory amid global uncertainties, domestic challenges, and ongoing recovery efforts from the COVID-19 pandemic and external shocks like the Russia-Ukraine conflict. The review emphasized the government's commitment to fiscal discipline, economic stabilization, and inclusive growth, while addressing key sectors such as agriculture, energy, education, and health.

The Minister began by recapping the macroeconomic context, noting that Ghana's economy has shown resilience despite headwinds. Real GDP growth for the first quarter of 2024 was reported at 4.7%, surpassing initial projections and driven primarily by robust performances in the services and industrial sectors. This growth figure reflects a rebound from the economic slowdown experienced in previous years, attributed to prudent monetary policies and strategic investments. Inflation, a persistent concern, has been on a downward trend, with the year-on-year rate dropping to around 23% by mid-2024, down from peaks above 50% in late 2022. The Minister attributed this moderation to effective supply chain management, stabilized food prices, and the Bank of Ghana's tight monetary stance, which included maintaining the policy rate at 29% to curb inflationary pressures.

Fiscal performance was a central theme of the review. The government reported a budget deficit of approximately 5.5% of GDP for the first half of 2024, aligning closely with the targeted 6.4% for the full year. This was achieved through enhanced revenue mobilization efforts, including digitalization of tax collection systems and crackdowns on tax evasion. Domestic revenue collection reached about GH¢70 billion in the period, representing a 25% increase compared to the same timeframe in 2023. Key contributors included value-added tax (VAT) reforms and improved efficiency in the extractive industries, particularly gold and cocoa exports. On the expenditure side, the Minister highlighted controlled spending, with a focus on capital investments in infrastructure projects such as road networks and rural electrification, which accounted for roughly 20% of total expenditures.

Looking ahead to 2025, the review outlined ambitious fiscal projections aimed at sustaining growth and reducing debt vulnerabilities. The government anticipates GDP growth of 5.0% in 2025, supported by continued investments in the agricultural sector under initiatives like Planting for Food and Jobs Phase II. This program is expected to boost food security, reduce import dependency, and create employment opportunities, particularly for the youth. The Minister projected inflation to further decline to single digits by the end of 2025, contingent on stable global commodity prices and effective forex management. To achieve this, the Bank of Ghana plans to build foreign exchange reserves to cover at least four months of imports, up from the current three months.

Debt management strategies featured prominently in the presentation. Ghana's public debt stood at about 90% of GDP as of mid-2024, a slight reduction from previous levels following successful debt restructuring under the IMF's Extended Credit Facility program. The Minister announced plans for further debt sustainability measures, including negotiating with external creditors for more favorable terms and prioritizing domestic borrowing to minimize currency risks. A key highlight was the allocation of funds from the recent Eurobond issuance, which raised $2.5 billion, towards debt servicing and critical infrastructure. The review also addressed the ongoing impact of the Domestic Debt Exchange Program, assuring Parliament that measures are in place to protect small bondholders and pension funds.

Sector-specific allocations and policies were detailed to underscore the government's priorities. In education, an additional GH¢5 billion is earmarked for 2025 to expand the Free Senior High School program, including infrastructure upgrades and teacher training. Health sector funding will see a 15% increase, focusing on completing regional hospitals and enhancing vaccine distribution networks post-COVID. The energy sector, plagued by intermittent power supply issues, will benefit from investments in renewable sources, with a target to increase solar and wind contributions to 10% of the energy mix by 2025. The Minister emphasized the role of the African Continental Free Trade Area (AfCFTA) in boosting exports, projecting a 20% rise in non-traditional exports like processed foods and textiles.

Social protection measures were not overlooked. The review included updates on the Livelihood Empowerment Against Poverty (LEAP) program, which has expanded to cover over 1.5 million vulnerable households with cash transfers. To address youth unemployment, estimated at 13%, the government plans to roll out skills development initiatives in partnership with the private sector, aiming to create 500,000 jobs by 2025 through sectors like digital technology and agribusiness. Gender-responsive budgeting was highlighted, with specific allocations for women's entrepreneurship programs to promote economic inclusion.

Environmental sustainability and climate resilience formed a forward-looking component of the review. Recognizing Ghana's vulnerability to climate change, the Minister proposed green bonds to finance reforestation projects and flood control infrastructure. This aligns with international commitments under the Paris Agreement and aims to attract foreign direct investment in sustainable development. The cocoa sector, a backbone of the economy, will receive targeted support to combat deforestation and improve farmer livelihoods, with projections for cocoa production to reach 900,000 metric tons in 2025.

The presentation also touched on revenue enhancement strategies for 2025, including the introduction of a unified tax administration system to streamline collections and reduce leakages. Excise duties on tobacco and alcohol may see modest increases to discourage consumption and generate additional revenue, while incentives for electric vehicle imports are planned to promote eco-friendly transportation. The Minister addressed concerns over fuel prices, noting subsidies to cushion vulnerable populations amid volatile global oil markets.

In terms of international relations and economic diplomacy, the review underscored Ghana's engagement with multilateral institutions. The successful completion of the second IMF review unlocked $360 million in disbursements, providing fiscal space for priority spending. Partnerships with the World Bank and African Development Bank are expected to yield grants and loans for infrastructure, with a focus on digital economy development to enhance e-governance and financial inclusion.

Parliamentary reactions during the session were mixed, with opposition members questioning the optimism of growth projections amid rising living costs and debt burdens. The Minister defended the figures by citing data from independent sources and emphasizing the government's track record in economic management. He called for bipartisan support to implement the proposed measures, stressing that collective effort is essential for Ghana's long-term prosperity.

Overall, the 2025 Mid-Year Budget Review paints a picture of cautious optimism for Ghana's economy. By balancing fiscal prudence with targeted investments, the government aims to navigate challenges like geopolitical tensions and climate risks while fostering inclusive growth. The presentation reinforces the administration's vision of transforming Ghana into a resilient, upper-middle-income economy, with a strong emphasis on human capital development and sustainable practices. As the country approaches the end of 2024, the implementation of these strategies will be closely monitored by stakeholders, including civil society and international partners, to ensure they translate into tangible benefits for all Ghanaians.

This extensive review not only updates on current fiscal health but also sets the stage for the full 2025 budget presentation later in the year, providing a roadmap for economic stability and progress. (Word count: 1,028)

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[ https://www.ghanaweb.com/GhanaHomePage/NewsArchive/LIVESTREAMING-Minister-of-Finance-presents-2025-Mid-Year-Budget-Review-in-Parliament-1993099 ]